Albertsons Companies (ACI) AI Stock Analysis

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Albertsons Companies

(NYSE:ACI)

71Outperform

Albertsons Companies exhibits strong revenue and cash flow growth, making it a stable player in the grocery industry. However, high leverage and operational efficiency challenges weigh on the financial performance. The technical indicators suggest positive stock momentum, while valuation appears reasonable. Despite some earnings call highlights, concerns about margin pressure and inflationary impacts present risks. Overall, Albertsons holds a moderately positive outlook with room for improvement in financial leverage and operational margins.

Positive Factors

Digital Media Capabilities

ACI’s ability to leverage its digital media capabilities, invest in new store openings and upgrades, and expand its loyalty program to drive accelerating growth in pharmacy and e-commerce sales and in-store traffic enable it to perform well.

Earnings Performance

The quarter solidly beat the market expectation even excluding lower interest and tax rate.

Negative Factors

Earnings Guidance

EPS guidance of $2.03-2.16 fell short of the $2.28 consensus and $2.30-ish market bar.

Margin Pressure

Mix shift to eCommerce and Pharmacy continues to pressure margins for the time being.

Albertsons Companies (ACI) vs. S&P 500 (SPY)

Market Cap

$12.28B

Dividend Yield2.46%

Average Volume (3M)7.98M

Price to Earnings (P/E)11.9

Beta (1Y)0.12

Revenue Growth1.46%

EPS Growth-26.54%

CountryUS

Employees108,300

SectorConsumer Defensive

Sector Strength77

IndustryGrocery Stores

Share Statistics

EPS (TTM)0.46

Shares Outstanding579,379,330

10 Day Avg. Volume6,020,240

30 Day Avg. Volume7,983,349

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.15

Price to Cash Flow (P/CF)5.60

P/FCF Ratio5.60

Enterprise Value/Market Cap2.08

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit1.25

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$23.55

Price Target Upside7.39% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering12

Albertsons Companies Business Overview & Revenue Model

Company DescriptionAlbertsons Companies, Inc. (ACI) is one of the largest food and drug retailers in the United States. Founded in 1939, the company operates a network of supermarkets and stores across multiple states under well-known banners such as Albertsons, Safeway, Vons, and Jewel-Osco. Albertsons offers a wide array of products including fresh produce, meats, dairy, bakery items, and pharmacy services, catering to diverse consumer needs. The company emphasizes high-quality private label brands and a strong focus on customer service to enhance the shopping experience.

How the Company Makes MoneyAlbertsons Companies generates revenue primarily through the sale of groceries and pharmacy products in its retail stores. A significant portion of its income comes from its extensive portfolio of private label brands, which offer higher margins compared to national brands. Additionally, Albertsons earns money through its pharmacy services, which include prescription medications and healthcare products. The company also benefits from strategic partnerships with suppliers and manufacturers, as well as promotional activities and loyalty programs that drive customer engagement and sales. Other revenue streams include fuel centers and digital sales, as Albertsons expands its e-commerce capabilities to meet the growing demand for online grocery shopping.

Albertsons Companies Financial Statement Overview

Summary

Albertsons Companies shows strong revenue growth and operational efficiency, supported by solid cash flow management. However, high debt levels pose potential risks, particularly in adverse economic conditions.

Income Statement

Very Positive

Albertsons Companies has demonstrated consistent revenue growth over the years, with a TTM revenue increase to $79.93 billion. The gross profit margin for TTM is strong at 27.79%, and while the net profit margin has seen a decline to 1.30%, it remains positive. EBIT and EBITDA margins are stable, reflecting operational efficiency. However, the slight decrease in the EBIT margin from prior years highlights some pressure on operational costs.

Balance Sheet

Positive

The balance sheet showcases a high debt-to-equity ratio of 4.22, indicating significant leverage, which poses a financial risk. However, the return on equity has improved to 30.81%, reflecting efficient use of shareholder funds. The equity ratio is lower at 12.62%, suggesting a reliance on debt financing, which could be risky during economic downturns.

Cash Flow

Positive

Cash flow analysis reveals positive trends, with free cash flow growth of 36.00% in the latest TTM period, indicating strong cash management. The operating cash flow to net income ratio is healthy at 2.22, suggesting efficient cash generation relative to net income. Despite a high level of capital expenditures, the company maintains a solid free cash flow to net income ratio of 0.82.

Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
79.24B	77.65B	71.89B	69.69B	62.46B
	Gross Profit
20.43B	21.76B	20.72B	20.41B	17.59B
	EBIT
2.07B	2.31B	2.44B	1.62B	923.80M
	EBITDA
4.54B	4.80B	4.89B	3.79B	3.19B
	Net Income Common Stockholders
1.30B	1.51B	1.62B	850.20M	466.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
188.70M	455.80M	2.90B	1.72B	470.70M
	Total Assets
26.22B	26.17B	28.12B	26.60B	24.74B
	Total Debt
14.24B	14.96B	14.03B	14.47B	14.68B
	Net Debt
14.05B	14.51B	11.12B	12.75B	14.21B
	Total Liabilities
23.47B	24.56B	25.10B	25.27B	22.46B
	Stockholders Equity
2.75B	1.61B	3.02B	1.32B	2.28B
Cash Flow		Free Cash Flow
628.20M	700.00M	1.91B	2.27B	428.80M
	Operating Cash Flow
2.66B	2.85B	3.51B	3.90B	1.90B
	Investing Cash Flow
-1.75B	-1.98B	-1.54B	-1.57B	-378.50M
	Financing Cash Flow
-1.18B	-3.37B	-789.50M	-1.04B	-2.01B

Albertsons Companies Technical Analysis

Technical Analysis Sentiment

Positive

Last Price21.93

Price Trends

50DMA

21.28

Positive

100DMA

20.50

Positive

200DMA

19.67

Positive

Market Momentum

MACD

0.21

Negative

RSI

53.79

Neutral

STOCH

47.29

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ACI, the sentiment is Positive. The current price of 21.93 is above the 20-day moving average (MA) of 21.57, above the 50-day MA of 21.28, and above the 200-day MA of 19.67, indicating a bullish trend. The MACD of 0.21 indicates Negative momentum. The RSI at 53.79 is Neutral, neither overbought nor oversold. The STOCH value of 47.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ACI.

Albertsons Companies Risk Analysis

Albertsons Companies disclosed 43 risk factors in its most recent earnings report. Albertsons Companies reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Albertsons Companies Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WMK	77 Outperform	$2.37B	21.52	7.80%	1.54%	2.00%	5.89%
KR	73 Outperform	$47.60B	19.60	26.59%	1.74%	-1.94%	23.94%
SFM	72 Outperform	$17.02B	39.16	35.74%	―	15.51%	53.77%
ACI	71 Outperform	$12.28B	11.91	31.26%	2.46%	1.46%	-26.54%
IMKTA	67 Neutral	$1.17B	15.25	5.15%	1.04%	-7.38%	-57.42%
GO	65 Neutral	$1.62B	41.49	3.27%	―	10.13%	-50.29%
Sector *	64 Neutral	$8.88B	14.97	4.71%	174.26%	3.67%	4.40%

* Consumer Defensive Sector Average

Performance Comparison

ACI

Albertsons Companies

21.93

1.86

9.27%

IMKTA

Ingles Markets

63.20

-8.24

-11.53%

Kroger Company

72.02

17.96

33.22%

WMK

Weis Markets

87.97

25.75

41.39%

SFM

Sprouts Farmers

173.93

98.93

131.91%

Grocery Outlet Holding

16.48

-9.33

-36.15%

Albertsons Companies Earnings Call Summary

Earnings Call Date:Apr 15, 2025

(Q4-2024)

% Change Since: 2.38%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a mixed sentiment. While Albertsons reported strong growth in E-commerce, loyalty programs, and pharmacy revenue, as well as significant productivity savings and shareholder returns, the company faces challenges with gross margin pressure, declining adjusted EBITDA and EPS, inflationary headwinds, and potential tariff impacts.

Q4-2024 Updates

Positive Updates

Strong E-commerce and Loyalty Growth

E-commerce grew 24% in the fourth quarter and the full year, with first-party far outpacing third-party growth. Loyalty membership grew by over 15% year-over-year to more than 45 million members.

Pharmacy Revenue Increase

Pharmacy revenue increased 18% year-over-year, driven by industry-leading script and immunization growth, and best-in-class customer satisfaction scores.

Productivity and Cost Savings

From fiscal year 2025 through fiscal year 2027, Albertsons expects to deliver $1.5 billion in productivity savings, which will be reinvested in growth initiatives and customer value propositions.

Albertsons Media Collective (AMC) Expansion

AMC is expected to grow faster than the retail media market, with significant investments to improve both endemic and non-endemic brand reach.

Capital Allocation and Shareholder Returns

Albertsons returned approximately $87 million to shareholders through dividends and repurchased $83 million of common stock in Q4 2024. The company plans to complete a $2 billion share repurchase program over the next three years.

Negative Updates

Gross Margin and SG&A Pressure

Gross margin decreased by 45 basis points due to strong growth in Pharmacy sales and increased digital volume-related delivery costs. SG&A expenses also increased due to business transformation costs.

Adjusted EBITDA and EPS Decline

Q4 2024 adjusted EBITDA was $855 million compared to $916 million last year, and adjusted EPS was $0.46 compared to $0.54 in the fourth quarter of 2023.

Inflationary Headwinds and Consumer Behavior

Inflationary pressures have elevated customer needs for value, with a shift towards value and promotional items. SNAP customers are experiencing more pressure, affecting consumer behavior.

Tariffs and Cost of Goods Concerns

The potential impact of tariffs remains a concern, as Albertsons procures more than 90% of products domestically, but ingredient sourcing from tariff-impacted areas could affect costs.

Company Guidance

In the Albertsons Companies Fourth Quarter and Fiscal Year-End 2024 earnings call, guidance for fiscal year 2025 was highlighted with several key metrics. The company projected identical sales growth ranging from 1.5% to 2.5%, assuming inflation of 1.5% to 2%. Adjusted EBITDA is expected to be between $3.8 billion and $3.9 billion, with approximately $65 million related to the fiscal year's 53rd week. Adjusted EPS is anticipated to be in the range of $2.03 to $2.16, including a $0.03 contribution from the 53rd week. Capital expenditures are forecasted to be between $1.7 billion and $1.9 billion. The company aims to achieve $1.5 billion in productivity savings from fiscal 2025 through fiscal 2027, which will be reinvested into growth initiatives and to offset inflationary pressures. Additionally, Albertsons plans to continue investing in digital growth, the Albertsons Media Collective, Health and Pharmacy, and operational technology to enhance customer engagement and value proposition.

Albertsons Companies Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Albertsons Companies Announces CEO Vivek Sankaran’s Retirement

Neutral

Mar 3, 2025

Albertsons Companies announced the retirement of CEO Vivek Sankaran, effective May 1, 2025, with Susan Morris, the current Executive Vice President and Chief Operations Officer, set to succeed him. This transition is part of a comprehensive succession plan, with Morris bringing nearly 40 years of industry experience to the role, aiming to continue the company’s growth and strategic initiatives, including the ‘Customers for Life’ strategy.

Executive/Board Changes

Albertsons Announces Board Change with New Appointment

Neutral

Feb 21, 2025

On February 21, 2025, Stephen Feinberg resigned from the Board of Directors of Albertsons Companies, Inc. His departure was not due to any disagreements with the company or its management. Following his resignation, Frank Bruno was appointed to the Board. Bruno, who is Co-Chief Executive Officer and Senior Managing Director of Cerberus Capital Management, was designated by Cerberus, which holds significant shares in Albertsons and provides services to the company.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.